How it works: Etsy Wholesale

Etsy is a great place to sell your handmade products. But did you know you can also get your business to a new level using Etsy Wholesale? Etsy Wholesale is a business-to-business platform that connects artists and designers with retail businesses. Let's take a closer look at Etsy Wholesale and how it works.

What is Etsy Wholesale?

Etsy Wholesale is a private marketplace curated by Etsy, which means you have to apply to sell (as well as to buy) there. Currently over 11 000 retailers buy products for their stores at Etsy Wholesale! So if you create something unique and demanding this can be a great way to grow your business.

Here is what selling wholesale can help you with:

It can provide a regular flow of bigger, more lucrative orders, in contrast to the unpredictable, one-off nature of retail sales;

It gets items out into the world in front of different kinds of shoppers, which builds brand recognition;

It can motivate you to re-evaluate and streamline your production methods;

Doesn't it sound great? Having bigger, steady orders that won't just bring you money but also will build your brand recognition? Of course it is. However, it's not all that simple.

First of all, Etsy Wholesale is not currently available for vintage items or craft supplies. Which means it's open only for handmade products.

Also sellers who do not list in USD cannot set up on Etsy Wholesale. But it doesn't mean that it is open for US sellers only. You can set your shop to list products in USD even if you live outside of the US and that will make you eligible for applying to Etsy Wholesale.

As we already mentioned Etsy Wholesale is a private marketplace. You cannot get there unless you are an accepted seller or an accepted buyer. Both sellers and buyers have to meet the requirements for Etsy Wholesale. Lets get closer look at the 3 most valuable seller requirements for Etsy Wholesale.

1. Wholesale pricing. The most important criteria for wholesale sellers is wholesale pricing. Wholesale sellers must offer wholesale prices that are 50% (or less) of the suggested retail price. And suggested retail price (also known as MSRP that stands for Manufacturer's Suggested Retail Price) must match the current retail prices in Etsy shop or seller's own website. If a retailer that sells your work finds you charging less than your MSRP in your Etsy shop they will be very concerned and confront you about it. They may never reorder from you again.

Now, one might think that 50% discount is really too much. But in fact this mark-up covers retailer's overhead and other costs (like paying salary, rent, advertisement, etc). If you as a seller think that 50% discount is really too much you probably underpricing your products. You should consider raising your retail prices when selling directly, cut costs and streamline your business. If you think that your products cost just as much as they should and there is no way to change your production methods or cut costs then wholesaling just might be not for this particular product. Wholesale isn't the right business choice for every product. Try to think if you can create a line only for a wholesale where the margins would be better. You don't have to wholesale all of your products. You can wholesale only certain product lines — especially the ones that can be most easily streamlined.

And here is the most popular formula to calculate wholesale (and retail) price:

Cost of Goods = Supplies + Overhead + Labor

Cost of Goods x 2 (or more) = Wholesale Price

Wholesale Price x 2 (or more) = Retail Price

For the Supplies part of this formula, you'll want to determine the cost of the raw materials that go into each item.

Overhead can be that sneaky cost that seems invisible. It's a good idea to spend some time tracking your overhead expenses. For example, how much gas do you spend driving to your studio everyday? All these little things add up to overhead – the cost of doing business.

Labor is your hourly wage. You do a lot on top of designing your items, so be sure to factor in your diverse talents as you consider your hourly wage. For example, think about the time you spend not just on production (making the item), but also on photography, marketing, shipping and other tasks.

Here is also a spreadsheet from Etsy to practice wholesale pricing. It uses silkscreened tote bags as an example. Of course, every product type is going to be different, but this exercise will help demonstrate how to price for wholesale.

2. Upstanding Citizen. If you already have an Etsy shop, Etsy will review your track record with customer service and reviews, paying Etsy bills, and complying with Etsy policy when assessing your readiness for wholesale.

3. Overall Professionalism: When reviewing your application, Etsy also looks to see that you have a strong assortment of product and professional branding and aesthetic in your Etsy shop or your own website.

If you have well established shop it shouldn't be a problem to meet these requirements.

Now if you think that your products are just right for wholesale, you can provide big volume of products with at least 50% discount you can apply for Etsy Wholesale here.

In application you will need to provide information about your business, number of employees, agree to the wholesale pricing, specify your category, production details and contact information. Once approved, seller will have to pay a (one time) $100 joining fee and a 3.5% transaction fee on all purchase orders. There is a different fee structure (and bigger fee of 10%) when working with larger retail partners of Etsy (such as Macy's, Whole Foods, etc.)

Keep in mind that even if you meet all the requirements it doesn't guarantee you will be accepted to Etsy Wholesale. Etsy reserves the right to approve or reject any application to join Etsy Wholesale and to refuse service to anyone, for any reason, at any time.

Useful information: in the United States, wholesale is tax-free when the retailer has a resale tax identification number.

How it works?

If you have been accepted to Etsy Wholesale you will need to do some work to start your wholesale business.

First, you will need to create a linesheet for your wholesale products. Linesheet is just a product catalog for your buyers. It should have all information about products: a crisp image of the item, an identifying title or code (such as a SKU) and in-depth item details, along with information about yourself and the ordering process. You should also state order minimums, payment methods and terms, production times, shipping methods and costs, as well as return and cancelation policies to ensure a smooth transaction from beginning to end.

When your linesheet is ready and your wholesale shop is set up you'll be able to share a guest pass with potential buyers. The link will give them access to your linesheet, seller policies and profile.

Now when you receive an order on Etsy Wholesale you can check out the retailer’s profile and accept orders from the ones that feel like a win. It is totally up to you to decide what payment terms to offer - immediate payment or net terms if you have an established relationship.

For more detailed info about linesheets and policies here is a very useful article from Etsy about Wholesale policies and linesheets. We strongly recommend to read it to get all the information you need to operate your wholesale business.

When your first wholesale orders start coming you might get a little overwhelmed. To make your interaction with retailers more comfortable Etsy also provided a Wholesale Glossary and Wholesale Etiquette. These posts will help you understand all the unusual terms for a wholesale newbie and you will know how to speak with your retailers on the same language, when you should act first and how to be memorable and professional.

We hope this article helped you to understand what Etsy Wholesale is and how it can help you grow your business. As we said before wholesale doesn't work for every shop and every product. But if you know your cost of doing business and your target audience, have a strong branding, you're confident in your assortment and ready to re-invest some money in growing business - wholesale might be just right for you!